Tax Legislation

On April 19, 2012, the House, by a vote of 235 to 173, passed the Small Business Tax Cut bill (HR 9). The legislation would grant a 20-percent tax cut to small businesses with up to 500 employees. The estimated $46 billion one-year cost of the legislation was not offset. The legislation is unlikely to be taken up by the Senate and faces a veto threat from President Obama.

On March 29, 2012, with the House and Senate unable to agree on a long-term approach to transportation funding and with a March 31 deadline looming, Congress instead passed a 90-day extension of current funding without additional tax provisions. The President signed the legislation on March 30, 2012. The legislation will again be taken up after the Congressional recess period.

A reduced corporate tax rate, elimination of many business tax preferences, a new minimum tax on overseas profits, and much more are all part of President Obama’s recently released Framework for Business Tax Reform (the “Framework”).

On November 10, 2011, the Senate, by a vote of 95 to 0, approved legislation to repeal the three percent withholding on government contracts scheduled to take effect in 2013. The House also passed repeal legislation on October 27, 2011.

President Obama on February 22, 2012, signed into law a much-anticipated extension of the employee-side payroll tax cut through the end of 2012. After weeks…

On February 17, 2012, Congress passed the Middle Class Tax Relief and Job Creation Act of 2012, by a vote of 293 to 132 in the House and 60 to 36 in the Senate. The legislation continues the reduction in the employee portion of the Social Security tax to 4.2 percent through December, 2012. Prior legislation at the end of 2011 had extended the reduction through February, 2012.

On February 14, 2012, the President signed the FAA Modernization and Reform Act of 2012, which passed Congress on February 6th. The legislation extends the 4.3 cents per gallon excise tax on aviation fuel, the 7.5 percent excise tax on ticket purchases, and the 6.25 percent excise tax on property transport through September 30, 2015.

2011 had been predicted to be a quiet year in federal tax news – as it landed between major tax legislation in 2010 and expected tax reform in 2012 – but the year brought many significant tax developments from the Obama Administration, Congress, the Treasury Department, the IRS, and the courts.

Tax reform is taking center stage in Washington, D.C. Some of the proposals include $1.5 trillion in tax hikes. CCH offers insights into the possible impacts of the proposed legislation